Sergio Alejandro Castillo America's economy is slowing.

ECONOMIA 1
20172015119 Oct 06, 2019 OCTUBRE 07 2019
CNN NEWS

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The Federal Reserve doesn't have a magic wand to revive the slowing American economy. But
President Donald Trump might.
New evidence emerged last week showing how tariffs and the vast uncertainty surrounding the US-
China trade war are hurting the economy.
The manufacturing sector suffered its worst month since June 2009. Services, the larger portion of
the modern economy, grew at its weakest pace in three years.
And although the unemployment rate tumbled to a 50-year low, a remarkable feat, private payroll
growth continues to slow.
Taken together, the latest figures paint the picture of a slowing economy, but not one that's close to
collapsing. Either way, growth could use a jump-start. While stocks rallied sharply late last week on
hopes for a Federal Reserve rate cut, easy money alone won't solve the underlying problem: trade
uncertainty.
"The economy needs a resolution to the trade war. The longer this persists, the greater damage it
does to the US economy," said Kristina Hooper, chief global market strategist at Invesco.
The outlook for the economy is dimming. The New York Federal Reserve's GDP growth
forecasting model was downgraded on Friday to 1.3% for the fourth quarter, compared with an
earlier forecast of 1.8%.
The good news is that US and Chinese officials are scheduled to meet this week in Washington to
try to make progress towards trade peace. Expectations are low for a breakthrough, although if one
emerged it would immediately boost sagging business spending.
"We really need to have a rollback of the tariffs for there to be an improvement in CEO
confidence," said Hooper.
Instead of getting rolled back, however, tariffs are currently scheduled to go up.
US tariffs on $250 billion of Chinese goods are set to rise on October 15, to 30% from 25%. And
the Trump administration plans to impose 15% tariffs on December 15 on consumer-facing imports
from China, including laptops, smartphones and certain footwear and apparel.
The on-again, off-again nature of the trade war has created confusion among business executives.
"It's not the tariffs themselves. It's the uncertainty about tariffs that is causing businesses to hesitate
to make decisions," said David Kelly, chief global strategist at JPMorgan Funds. "Your entire
business plan can be overturned by a tweet."